Turf battle

How a team of outsiders changed some Nashville legal custom — and maybe the finances of its biggest civic project

As a populist champion, Alex Marks didn’t walk out of central casting.

A quiet man, Marks heads up the Nashville arm of his family’s successful California-based real-estate investment firm, Tower Investments. Extraordinarily successful and extraordinarily rich, he’s not exactly George Bailey.

But through a bold gambit amid a lengthy condemnation dispute with the Metropolitan Housing and Development Agency over a six-acre former parking lot that’s now a key parcel in the northeast corner of the Music City Center’s footprint, Marks and his attorneys changed the way eminent-domain cases are handled in Davidson County.

From the beginning, Marks — who was an early and ardent backer of the Music City Center in a general sense and a contributor to Karl Dean’s campaign — said MDHA’s offer of $14.8 million for his land was too low. After all, he’d paid $14.7 million for it three years ago.

Meanwhile, he sold an adjacent parcel — another parking lot — to Omni Hotels for $20 million. That land will soon house the headquarters hotel for Nashville’s new convention center.

In dealing with MDHA, Tower has followed the process: Dispute the valuation and go to court. “Court” in this case was the Third Circuit Court of Davidson County, where eminent-domain cases have been assigned since 1978, a vestige of a time when the Third Circuit judge was something of a takings-law enthusiast. In one of numerous hearings, Haynes said the judge “really liked these kinds of cases.”

In the three decades since, it apparently never occurred to anybody to randomly assign the eminent-domain cases, as is done for nearly every other type of civil dispute.

Until now.

From the start, Tower’s team of lawyers — led by another Californian, Alton Burkhalter — tried to get Haynes off the case.

Haynes’ daughter, Amanda Haynes Young, is, after all, a partner at Miller & Martin, the firm that regularly represents MDHA in takings cases. Young’s chief responsibility at the firm is far away from that field; she’s an expert in health care and telecommunications and acts as Verizon’s lobbyist on Capitol Hill. Nonetheless, for Tower’s attorneys, having Haynes on the bench didn’t pass the smell test.

Haynes noted that all of her children as well as her husband, state Sen. Joe Haynes, are attorneys in Middle Tennessee and that she has carefully constructed a “Chinese wall” to maintain her judicial integrity during her time on the bench.

“I cannot do a job if I recuse myself every time a firm with ties to my children or their friends comes in here,” she said. “I deliberately do not talk to my children about their salaries or who their favorite senior partner is.”

By blood, by marriage and by connection, Haynes is tied to a number of the top-level firms in Nashville and, according to her, it didn’t make sense to move off a case because of a connection as tenuous as her daughter working at the firm representing the city.

Joe Binkley, the presiding judge of the Davidson County Circuit, disagreed and eventually changed the 33-year-old policy. But Haynes still didn’t immediately recuse herself, emphasizing again she’d only do so if one of her family members was, in fact, the attorney of record.

Meanwhile, a jury of real-estate experts — the term of art is “jury of view” — valued Tower’s land at $16.1 million, a valuation that, though higher than what it intended to pay, MDHA did not dispute. Marks, though, was still unsatisfied and pressed on for a trial with a lay jury.

And on one Friday afternoon, the gambit — motion after motion putting pressure on a well-connected and well-liked judge — worked. Haynes recused herself.

For the first time in her 20 years on the bench, Haynes would not preside over a major takings suit. The suit was transferred to Binkley, the jurist who had reversed the 33-year-old assignment policy.

Turning the tide

Haynes had been on the bench when the city built its arena and professional football stadium, the two previous high-profile, high-price tag civil projects. But she wouldn’t hear the final arguments in this battle, centered on the priciest capital project in city history.

While the attorneys and Marks will argue that getting Haynes off the case was purely a matter of avoiding the appearance of impropriety, don’t be so naive as to think their motives were wholly altruistic.

Haynes, according to numerous Nashville land-use lawyers, has a reputation for acting largely in the government’s favor on eminent-domain cases. While judges almost never set the final value in disputed takings cases, they can make summary judgments.

Haynes did so more than a decade ago in barge builder Trinity Marine’s dispute with MDHA about East Bank stadium land, essentially dismissing the company’s claim it was owed more than offered. In fact, she reduced Trinity’s relocation fee by 20 percent, even after company officials said they needed more than the $1 million MDHA offered. The state Supreme Court upheld her decision.

Haynes’ early rulings on motions in the Tower case largely — almost exclusively — went in MDHA’s favor. Most importantly, she excluded testimony from Tower’s appraiser, Jimmy Lamb, as well as evidence regarding the value of the Omni Hotel land.

Binkley allowed the jury to hear both, which proved crucial to Tower and its legal team.

Not coincidentally, the value the jury ultimately settled on — nearly $30.4 million — was exactly what Lamb said the 5.6 acres is worth.

The takeaway here for the taxpayer is that the MCC’s land-acquisition and legal budgets are exhausted. The spending plan for the convention center included a $15 million contingency, but paying $30 million for the Tower tract saps the vast majority of that.

What’s more: There are still two pending land value cases involving the Musicians Hall of Fame and the Downtown Platinum properties. If juries increase the payout for those parcels at the same rate as Tower’s payment was increased, the contingency will disappear.

After Tower’s gambit paid off, MDHA took less than a week to counter with a gamble of its own. Last Thursday afternoon, the agency said it would appeal the jury’s award.

It’s a calculated play. MDHA had to weigh whether to make the legal line item a deeper shade of crimson in an effort to pull the land acquisition line back toward the black. The legal budget was set originally at $1.5 million, but MCC spokeswoman Holly McCall says $1.54 million has been spent already and at least $300,000 will to be shelled out in the Hall of Fame and Platinum cases. Now that figure will climb higher with the appeal — but a win could minimize the overage in the land budget.

Announcing the appeal, MDHA Executive Director Phil Ryan riposted elegantly. If Marks was fighting Old Nashville insiders, Ryan is the taxpayers’ watchdog.

“In order to be good stewards of public funds, today we directed our attorneys to begin the appeal process,” he said. “The evidence clearly showed that Tower purchased the property knowing it was in the footprint of the Music City Center. […] Tower’s intent was to make millions off the public. We feel strongly this property did not double in value in just three years during a major recession.”

While the legalistic swordplay has a certain poetic romance, the Metro Council may ultimately have to govern in prose. A loss on appeal means the council must decide whether to exercise the option on the original financing plan to issue up to $50 million in additional bonds.

It’s a serious bruise to what has been Dean’s biggest first-term accomplishment — and all it took was a wealthy Californian and a team of outsiders challenging the status quo.